Are You Building A Company, Or Just Your Credentials?

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Editor’s note:Geoff Lewis is an entrepreneur, investor, and business advisor. Most recently, Geoff served as the co-founder and CEO at loyalty and reward startup Topguest. Follow him on Twitter @justGLew.

Y Combinator recently announced that for the next batch, the incubator will accept applications from groups and individuals without an idea. That same night, I received a breathless call from a friend currently finishing up his MBA at an elite east coast business school, asking me for help putting together his “Without Idea” Y Combinator application.

This friend is smart, dynamic, and an all-around great person. But he’s not someone I consider to be entrepreneurial. He was a management consultant at a big firm for years before business school, and loved it. He’s the first to admit that his interest in startups conveniently coincided with the premier of The Social Network a few years back. So on the call, I asked him, “why jump into entrepreneurship now. You are someone who likes to be on a stable path. Why do you suddenly want to start a startup?”

His answer: “Even if the startup ends up going nowhere, graduating from Y Combinator would be such a great credential.”

And with that, it hit me. He was far less interested in actually building a company than he was in obtaining another credential to add to his mantle. This type of credential-seeking is rampant in the world at large: For example, many go to law school for the degree, not because they want to be lawyers. Perhaps there is nothing inherently wrong with credential-seeking, but it seems like something that does not belong in Silicon Valley.

Here, it’s supposed to be all about how much value you’re creating for the world, not about how much perceived value has been bestowed upon you. Yet while dropping out of college may be en vogue, it seems like these days credentials, albeit not degrees, are very much in the startup zeitgeist. Whether it’s participating in an accelerator like Y Combinator, getting a seed investment from a big name super angel or celebrity investor, or being part of the “Company X” mafia, credentials are a hot commodity. On Tuesday, PandoDaily ran the post “9 Practical Tips on How to Get Into a Top Startup Accelerator”. Substitute “Top Startup Accelerator” for “Law School” and you can see how we might just be jumping the shark here.

The issue is not with the credentials themselves (I have nothing but respect for Y Combinator, and I’m grateful to the big name super angels who backed my most recent venture, Topguest). Rather, the issue is that as our ecosystem places more value on credentials, it’s only natural for entrepreneurs to pursue them more. I was as guilty of this as anyone. When I first jumped into entrepreneurship about two and a half years ago with Udorse, I put credentials first, and product a distant second. For our first few months, we focused entirely on getting into TechCrunch50 (now Disrupt) as a finalist, and raising a seed round from prestigious investors. We succeeded on both counts, but failed as a team and product.

It was all my fault. In retrospect, the mistakes I made seem so obvious (e.g. have a real product you believe in before you launch on stage at the highest profile startup event in the world, etc :-)). But at the time, those credentials just seemed so sexy, and I wanted them at the outset to “set us up for success.” They didn’t. The story has a very happy ending: We pivoted Udorse into Topguest and were acquired by Switchfly after 18 months, but the credentials had nothing to do with it.

Part of Paul Graham’s rationale for the Y Combinator “Without Idea” track is that many YC startups already are already changing their idea during the program, so it’s is a logical evolution. I think there is a fundamental difference between going after an initial idea, then pivoting, vs. jumping into entrepreneurship with no idea at all. With the meme of “execution is everything”, it’s easy to forget that ideas still matter. Part of what defines a great entrepreneur is their ability to paint a vision of the future that does not exist today, and rally an incredible team around it. You simply can’t do this without an idea. It’s possible that Paul and his team will be able to identify this ability by proxy in “Without Idea” candidates, but it will be extremely hard. In any case, Attention All Credential Seekers: You can now brand yourself as a YC entrepreneur without even having an idea, folks… Apply away!

After a long heart-to-heart with my friend, he decided to hold off on applying to YC this cycle. I’m going to help him brainstorm ideas, and introduce him to some prospective co-founders. He just may have the right stuff to build a real company, and I’m not going to hold his MBA against him.

If you’re in it to build a successful Company, the credentials will come to you, eventually. But if you’re in it for the credentials, you should consider law school.

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Crunchbase

OverviewTopguest is redefining loyalty program engagement for a mobile, social world. There are $48 billion of loyalty program points in US circulation, and Topguest is pioneering the use of these points to drive beneficial actions on social applications.
Topguest gives users points from established loyalty programs for their check-ins on Facebook Places, Foursquare, Twitter, Instagram and Gowalla.
Loyalty …